NewsNewsChannel 5 Investigates


Council Members Question Tax Incentives For Developers

Posted at 6:09 PM, May 13, 2015
and last updated 2015-09-07 14:18:58-04

NASHVILLE, Tenn. -- Some Metro Council members question whether Metro is following state law regarding certain tax breaks for developers.

It follows a NewsChannel 5 investigation into the city's use of tax-increment financing, also known as TIF. Our reports revealed some of Nashville's most prominent buildings are essentially off the property tax rolls.

Councilman Josh Stites said he did not know that the Metro Council had passed legislation reaffirming downtown as blighted and unsafe, paving the way for the use of tax increment financing.

"As a member of council, it's embarrassing to say that we are not vetting these things when they come before us," Stites said.

The TIF program allows developers to get loans -- using property tax money -- to build in blighted areas.

But our investigation discovered even after those loans were paid off, Metro continued diverting most of the property taxes to Metropolitan Development and Housing Authority, the city's development agency.

Councilman-At-Large Charlie Tygard discussed our investigation on OpenLine on NewsChannel 5 Plus.

"I thank you for your efforts -- the story tonight has educated me," Tygard said.

In a later interview, Tygard said he was unaware Metro continued to send property tax money to MDHA -- even after the TIF loans were paid off.

"I think most of us (on the council) felt like when these buildings get paid off and the TIF money ends, then all that money would flow back into the general fund," Tygard said.

Attorney Betsy Knotts in the state Comptroller's Office said the state passed a law in 2012 designed to regulate how communities use tax increment financing.

"There is a need for a little more oversight," Knotts said.

She reviewed Metro documents which showed that Tennessee's tallest building, the so-called Batman Building, had its TIF loan paid off in 2002. It generated $1.7 million in property taxes last year, but almost all of it went to MDHA for more development. Only $49,000 went to Metro.

NewsChannel 5 Investigates asked, "That money from that building is not going back into the General Fund. What do you think about that?"

Knotts responded, "It gives me pause."

Tygard's response: "When the attorney for the Comptroller’s Office said this practice 'gives me pause,' to me you might as well have been standing in the middle of the road waiving a red flag. Something is wrong."

Both Councilmen Stites and Tygard blame part of the reason for the confusion over tax incentives on the fact many issues are rushed before council members.

"The challenge for council members is that often times these deals are brought to us in the ninth hour, with the administration standing on one leg saying we've got to have it now," Stites said.

The Comptroller's Office is discussing whether the 2012 law regulating TIF has been implemented properly.

It is planning a meeting to discuss the law.

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